Environment Editor, The Sydney Morning Herald

Richard Keech with his smart meter at his Essendon home in Melbourne. Photo: Jesse Marlow

Update One of the largest network operators in Victoria has criticised state governments in Victoria and New South Wales over their handling of the debate about the roll-out of smart meters.

Jemena, which provides electricity to 319,000 homes and businesses across north-west Melbourne, said the Victorian government under Ted Baillieu had failed to back the $2.3 billion program for political reasons.

An earlier version of the program introduced by Labor premier John Brumby used simpler devices and would have cost $850 million.

The larger sum, along with Wonthaggi desalination plant and the Myki transit card, became key election fodder for the Coalition and they have continued to wield it, Scott Parker, Jemena’s general manager corporate affairs, said.

The government was happy to attend launches of online portals by firms such as Jemena that show how households could save money from the meters, he said.

“But it won’t get up there and defend the integrity of the program, and will still call it a program whose budget blew out under the previous government - and no such thing happened - but it’s not in their political interest to say otherwise.”

Victoria's Energy and Resource Minister Michael O'Brien, though, said the state's Auditor-General had found a "massive smart meter cost blowout" during the former government's watch.

"The Coalition Government independently reviewed the program," Mr O'Brien said in a statement. "As a result we are reining-in the costs and bringing forward the benefits of smart meters to consumers."

The Baillieu government decided a year ago to proceed with the mandatory state-wide introduction of the intelligent metering device – which provides two-way communication between the consumer and the energy provider – but had provided textbook “learnings” that other states would do well to study, Mr Parker said.

“The big thing was that smart meters needed to be rolled out in conjunction with time-of-use pricing ... so that people can see the benefit.”

Instead, the government introduced a moratorium on more flexible pricing in the state six months after the first meter installed, leaving consumers confused and opposed to the meters. From next July, Victorians will have the option to choose variable pricing from peak to shoulder and off-peak rates.

"The Coalition Government is determined to make smart meters start to pay their way, after years of mismanagement by Labor," Mr O'Brien said.

"Victoria will be the first State to introduce widespread access to flexible pricing and off-peak rates from mid-2013".

NSW view

Mr Parker said comments reported today in Fairfax Media that NSW’s Energy Minister Chris Hartcher was considering introducing smart meters on a voluntary basis foreshadowed far higher costs for the state than a mandatory roll-out.

“If you think there are significant cost pressures on the system now, and you’re going to run two metering systems, you’ve seen nothing ,” Mr Parker said.

Singapore-owned Jemena is also critical of the Victoria government’s mixed signalling on whether the new meters would be mandatory or not. In May last year, Premier Baillieu said on radio that people could defer installation of the meters, comments that have been repeated time and again.

“That played all sorts of havoc,” Mr Parker said, adding that the government doesn’t understand how much disruption the comments had caused the whole industry.

As a result, Jemena still has about 170,000 homes and businesses to connect by the end of next year, with financial penalties if the target isn’t met.

“It’s going to be a real challenge” meeting the goal, Mr Parker said, adding that the company was yet to formally seek an extension.

Jemena supports policy

Jemena later issued a media statement distancing the company from Mr Parker's comments.

“Jemena in no way endorses any of the comments reported in the article and confirms that it remains completely supportive of the smart meter program and the Baillieu Government’s role in leading the program,” Managing Director Paul Adams said in the statement.

“Jemena has consistently and publicly supported the program for over three years and has promoted its benefits to customers publicly on numerous occasions in recent months," Mr Adams said.